The FOA in addition to all the other information details the monetary limits on the types of expenses, like overall funding limits, construction allowed, and caps on travel expenses [4]. Before embarking on any project, carefully read the funding opportunity announcement for budget criteria and formulate your budget accordingly.

Do not under- or overestimate your budget, as it can adversely influence the chances of your proposal being accepted by suggesting to the reviewers that you do not understand the scope of the work involved. Reviewers keep in mind “the reasonable amount doctrine” to figure out whether the funds requested are justified by your aims and objectives.

Direct Costs: These are costs that can be directly attributed to your project with ease and accuracy.

F&A Costs or Indirect Costs: These are costs associated with providing and maintaining the infrastructure that supports the research enterprise (buildings, maintenance, libraries, restrooms etc.); these cannot be easily identified with a specific program [4].

“Facilities” is defined as depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, and operation and maintenance expenses [14]. “Administration” is defined as general administration and expenses, departmental and college administration, sponsored project administration, and all other expenditures not listed less than one of the subcategories of facilities [14].

F&A costs are determined in conjunction with auditors from the US Department of Health and Human Services for each institution. For profit organization, the F&A costs are negotiated by the Division of Cost Allocation (DCA), Division of Financial Advisory Services (DFAS) in the Office of Acquisition Management and Policy, and the NIH [4]. F&A costs are calculated by applying your organization’s negotiated F&A rate to your direct cost base. In general for most institutions, the negotiated F&A rate will use a modified total direct cost (MTDC) base, which excludes items such as equipment, student tuition, research patient care costs, rent, and sub-recipient charges (after the first $25,000) [4].

It is also worth knowing that direct cost requests equal to or greater than $500,000 require prior approval from the NIH Institute/Center before application submission. For many SBIR/STTR(Small Business Innovation research/Small Business Technology Transfer) grantees, 40 % of modified total direct costs is a common F&A rate, although rates at organizations may vary.

The strategy for success is to propose simpler projects with lesser budgetary demands, as reviewers will scrutinize larger funding requests. Budget requests to the NIH can be submitted under two categories:

For a new PI, a modular budget is preferable unless it cannot be avoided, as when the project requires >$250,000/year or you are based outside the United States of America. This becomes more evident on reviewing the FY 2010 data for competing R01 applications. The average application received roughly $290,000 in direct costs (not including the institution’s overhead). About 76 % of new investigators used a modular budget. Applications requesting $250,000 or less in direct costs used a modular budget, and for non-new investigators, 66 % went the modular route [5].

All research personnel from the investigator’s organization involved in the project should be mentioned in the budget with their base salary and effort, irrespective of whether they are requesting salary support or not.

The funds requested for research and support personnel are requested in person months. Conversion of percentage of effort to person months is straightforward. This is done by multiplying the percentage of the personnel effort by the number of months of appointment.

For example, 10 % of a 10-month appointment = 1.0 person month (10 × .10 = 1.0). Other issues to be addressed under this section are salary caps, fringe benefits, and senior/key personnel, which involves postdoctoral associates, graduate students, and other personnel.

Salary Cap: The NIH uses a salary cap to compensate the research and support personnel for your proposal. Requesting a salary above the salary cap will be counterproductive, as it results in a reduced total award amount. If in ensuing years the NIH increases the salary cap, the investigators can rebudget so that the personnel get paid as per the new cap [4].

The senior/key personnel who are devoting significant effort to the project should be mentioned. “Other significant contributors” who put meager effort should not be included. Examples of such common significant contributors include (1) CEOs of institutions providing overall leadership, but no direct scientific research contribution, and (2) mentors for K awardees, who provide advice and guidance to the candidate but do not directly work on the project. Consultants or associates who are not employed by the investigators’ organization should not be appended as senior key personnel, but rather should be included in the section of the budget for consultants or in the category of the consortium/subaward budget page for collaborators.

Postdoctoral associates and graduate students should be entered as per the percentage of effort put in the budget justification section. When justifying people having the same job description such as “lab assistants and technicians,” indicate the number of personnel involved with their role description, add their people months together, and add their requested salaries together. The salaries of secretaries and clerical staff are generally treated as overhead costs; if included as separate costs, their involvement should be directly and significantly related to the project [4].

Equipment is defined by the NIH as an item of property that has an acquisition cost of $5,000 or more (unless the organization has established lower levels), an expected service life of more than 1 year, be stand alone and function independently [4]. Sometimes replacement parts and fabricated equipment can be treated as exceptions to this standard definition. Generally, equipment is excluded from the facilities and administrative cost, so if you have something with a short service life (<1 year), even if it costs more than $5,000, you are better off appending it under the “supplies” category.

Routine equipment such as computers that will be used on other projects or for personal use should not be listed as a direct cost but should come out of the F&A costs, unless these items will be used solely for the actual conduct of the planned project.

Even when the application does not demand it, a price quote for new equipment, including price quotes in the budget proposal, can greatly help in the evaluation of the equipment cost to support the project.

Any time you request equipment that is costly, it is a wise strategy to first see if such equipment can be shared at your facility as this way you can cut down costs and have a better chance of success with the reviewers. In the event that the piece of equipment is vital and not available, then you will have to fully justify its need and also attest that it will be exclusively used for your project [5].

Your research project will require you or members of your team to travel. This has to be fully described in the budget request explaining the number of people traveling, dates, duration of your stay etc. It is again necessary that the travel has to be proximately related to the proposed research project. In the event that your institution lacks a specific policy for travel, then the US federal government policy in this matter can be adopted.

These are (1) materials and supplies, (2) animal costs, (3) publication costs, (4) consultant services, (5) computer services, (6) alterations and renovations (A&R), (7) research patient care costs, (8) tuition, and (9) others.